How an ATM and a smartphone can free up landlocked loan accounts
by Richard Crone, CEO, and Heidi Liebenguth Crone Consulting LLC
Cardless MCA, wherein a customer interacts with the ATM not by means of a card, but via a secure mobile banking app on their smartphone, can facilitate a new form of “transactional credit” for previously landlocked loan accounts.
To be more specific, by replacing card-based authentication with smartphone app-based cardless MCA, ATM deployers can offer their stakeholders the means to provide cash access to additional funded accounts that are not currently card-enabled such as: home equity and personal revolving lines of credit; money market accounts; brokerage and mutual funds, cash-balance insurance accounts and more.
In this way cardless MCA and mobile wallets in general can provide new functionality to lending lines at the ATM and POS, creating what we call “transactional credit.” This capability would enable new revenue streams from funded accounts beyond banks’ traditional credit and debit card account base through the mobile banking app — without the need to issue card association-branded plastic.
Cardless MCA app issuers can sell promotional advertising and offers that complement the transactional credit, extending the sales opportunities before, during and after each ATM or mobile payment transaction.
When the financial institution is both the mobile wallet issuer and the ATM deployer, cardless MCA would be an on-us transaction using new “over the top” routing schemes — bypassing the royalties and interchange associated with using card association-issued 16-digit PANs and customary rails of Visa or MasterCard.
In doing so, the mobile wallet cardless MCA issuer becomes the user interface and system of record not only for the clearing and settlement, but also for the recognition, validation and authentication of cardless MCA and mobile payment credentials. This has tremendous strategic value, because if you are not the SoR, you are always struggling for relevance in the processing food chain.
And the one who controls the UI controls the customer experience and flow of value-added products and services. Cardless MCA provides a natural progression toward vertically integrating cardless MCA and mobile payments as the SoR, graduating from the commoditized position of simply providing ATM services.
Financial institutions and ATM deployers can also issue a cardless MCA application programming interface to other funded account providers to drive new transactions to their ATM fleets, thus increasing foreign ATM fees and promotional revenue. Using data analytics, Cardless MCA sponsors can provide targeted advertising and offers that complement the transactional credit, extending the sales opportunities before, during and after each ATM or mobile payment transaction.
The issuer of cardless MCA can create an ecosystem of offers and deals that complement the loan or credit extension through the issuer’s mobile wallet app. Some examples include transactional credit linked to consumer home equity loans with special deals with local home improvement and appliance retailers. Or business and construction loans integrated with promotions from equipment and materials providers. And insurance-related products such as health care providers or hospitals; auto repair shops; and so on against a qualifying insurance claim.
While most financial institutions and ATM networks focus on competing for share of existing ATM transactions and soon, mobile payments from rivals, mobile wallet issuers with cardless MCA will leapfrog them all by creating a whole new class of ATM transactions, thereby changing the economics for themselves, participating financial institutions and ATM deployers in general.
Richard Crone and Heidi Liebenguth lead Crone Consulting LLC, an independent advisory firm specializing in mobile strategy and payments. Crone Consulting has helped define the mobile commerce and payments strategy for financial institutions of all size, as well as core processors, payment networks, telcos, consortiums and investors. They can be reached at www.croneconsulting.com.
Source: ATM Marketplace